very close to doing so. a good week for it. a number of people had doubts about the bank whether or not it could pass the stress test and it did. surprise was that citi didn't. >> let's go for a ride, mary. shall we? "street signs" comes up right now. we're going for a ride in a 1965 corvette. let's see if i can squeeze in. and welcome to "street signs" everybody. happy friday. i'm mandy drury. the new ipad making its debut, the lines are massive. apple's grip on our lives is just getting stronger. we want to know will our ifachuation fade and maybe too much of a good thing from obsession to addiction, america's love affair with gambling reaching a tipping point. the profit and pain from this gaming frenzy. and a new cold war. the chinese are coming. delegation meeting with business leaders in alabama trying to figure out how to build chinese

factories here in america. should we cheer or jeer this development? meantime s&p on track for the best weekly gain in 12 weeks. dow is within about 900 of an all-time high. the s&p 500 hitting another multi-year high holding above that 1,400 mark after surpassing it for the first time since 2008 just yesterday. and the nasdaq almost exactly 2,000 points below its all-time high despite being up 17% year-to-date. it's got a little way to go then. apple's gains have caused that number up 44% this year. talking apple the size and power of this company is just simply staggering. it is worth about $540 billion. and if apple was sliced up -- excuse the pun, you would get at least four power house companies. check it out. okay, based on sales from last quarter alone, the iphone brought in $24.4 billion. it's up here behind me. what if you broke out apple's hardware? we're talking here macs, ipads,

ipods, combined you get nearly $17 billion. now, there's also itunes, movies, music, books and beyond that brings in about $2 billion. add to the mix their retail footprint, the massive amount of patents and licensing components, don't forget about the cash as well nearly $100 billion just sitting there on the sidelines. this begs the question, is this giant apple just getting too big? it makes me really think of the movie "cloudy with a chance of meat balls" i'm sure you all caught it. are we maybe getting too much of a good thing? with us is fusion josh brown author of "backstage wall street." and brian marshal with a buy rating and our very own tech reporter, jon fortt. to all of you thank you so much for joining on the apple discussion. jon, first to you, are we getting too much of a good thing considering the market's depend

dependency on this company? if apple fails, will we all go with it? >> that's a good point from a market perspective because what we look at and we look at the different indices apple is a part of, it's making up a greater and greater share of both performance and cap weighting. we really hope apple doesn't stumble because of the outsized impact it can have on the overall markets and other components. remember, we're all just one big etf these days. >> yeah. brian, you have a buy rating on this stock. feels to me as though you feel it won't stumble any time soon. >> that's right, mandy. we published a report today that analyzed this. we call it the theoretical threshold of penetration. apple's two products iphone and ipad, specifically the iphone, we analyzed what's the upside of the current iphone business with the products they have today and the global carrier customer footprint. net-net we think they can grow an incremental 80% from where they are today basically 170

million iphone units without having -- or get to that level before growth moderates. we think there's a fair amount of upside left. >> it feels you're feeling it's a little premature to fear the law of large numbers issue. if we wanted to nonetheless break this company up -- that's also a question, should it be broken up? how could it be broken up? >> i think it makes zero sense to break it up but an interesting academic exercise. apple obviously succeeds on this ecosystem approach. all the products tied together. the apple tv will be the first product to integrate the home office in the living room. if you look at valuations, i think probably $300 billion alone is probably attributed to the iphone and another hundred billion attributed to ipad. there alone is almost $500 million. by the way that's growing on a daily basis. so i think it's an interesting academic exercise, but theoretically -- or from a real world perspective don't think it makes sense. >> jon, have you talked to

anyone that thinks it's more than just an academic exercise? are there any antitrust concerns there either? >> no. i'm sure some of apple's competitors would like to see it broken up. but the way apple works it really wouldn't make any sense. ios, the software on the iphone, ipad, other devices, is really a very close cousin of mac os. and retail stores sell apple gear, doesn't make sense to break that off. the itunes business, if you had to break something off, that would be one thing. relatively small contribution. profitwise even less. if apple will be in any trouble in any area, i would look at supplier side. they have an extreme amount of influence over the global market for flash memory, for instance. there are other components also where they have a lot of influence. you can imagine at some point down the line some supplier could bring a case somewhere saying, hey, apple's got too much leverage here, they're causing it to be difficult to do business.

but that's all of that's just theoretical, but it's an area where apple could get into trouble. >> i guess the antitrust concerns are certainly brought to the floor on a regular basis when you see apple having to go through the courts with companies like samsung. i want to ask regards to the share price, josh, it feels to me it's almost a stock priced to perfection when you look at the gains. some people say no from a valuation it's still cheap, but wouldn't it be good to see a little two-way trade come into this stock? >> we kind of saw some two-way trade around when steve passed, unfortunately. but this is a company where the p/e goes up, but the growth rate goes up even faster. and the cash continues to build up. and when you look at a valuation of this, you have to back that cash out. and when you do, the stock just remains so cheap compared to the overall market compared to its peers, compared to how it's traded historically. it's really hard to make the case. but this is a nosebleeder, this is not netflix, this is not green mountain coffee at its peak. this is really a stock trading at a decent multiple compare

today its growth rate. >> what would make you bearish? what would the bear case be, brian? >> mandy f you look at it, it surrounds the penetration analysis. so if they actually penetrate the markets, they're only about 6% of the global hand set and 6% of global pc markets today. i think they have a lot of runway left. but for some reason the people that can actually afford the iphone products actually stalls out, our analysis indicates that's 80% away from current numbers, i think apple will start to have some diminishing returns with respect to growth, margins start to deteriorate and the multiple would come down. it would be kind of like a vicious spiral down. we don't see that happening at least for the next 18 months perhaps 24 months at the very earliest in our opinion. >> so going mass market essentially. feels like it's inevitable, josh, right? at what cost though? >> well, i saw some of brian's statistics before coming on the air and i'm blown away by how small their penetration really still is.

you feel apple is so dominant and look where they are with the mac and iphone and seems there's such a long runway ahead of the company. >> and the international business as well. >> something i would caution about that though. >> yeah, jon. >> apple doesn't really attack the entire market. they attack the high-end market. something you want to do when you're considering apple's market potential is look at the growth of the middle class and emerging markets and also look at the health of the middle class in developed markets because they're not going to go after that customer who's buying the nokia phone that costs a total of $100 to build. that's not part of their market. three things i would point out as far as dangerous for apple, product error. that happens every once in a while. even intel messes up with their chips. apple's designing their own chips. they haven't messed up. that's something to watch for. strategy error. back ten years ago apple didn't build cd burners into macs at a key moment. that caused problems. and then they came out with itunes and cd burners, but if they miss a technology

transition and finally government issues which we've talked about. >> brian, the final question i want to ask you is who is the closest competitor to apple? are they likely to catch up any time soon? >> well, i would say from a product perspective, probably samsung and to a lesser extent amazon probably the most close customers. i think from a service perspective, google. so i kind of look at those three guys as the ones competing against apple at this point. but, again, at the end of the day i think they have such a far lead in all the products and all the ecosystems that it's going to be very difficult to displace them. >> and your new price target is $650. jon, before we let you go, there is news this hour about apple's working conditions in china. i know this has made headlines for some weeks now. what's the latest on that? can you tell us? >> i can't. i don't have it in front of me. but this american life had done a piece a while back off of the one-man show airing in new york about the guy who went to china, had a translater and talked about worker abuses in china. they are now disavowing that

piece saying that the man who did that show gave them information that was not correct. so need to follow-up and find out exactly what it is that they're saying that they can't verify is true, but this is very interesting because apple lately has fought back strongly against some of the kinds of allegations. of course the "new york times" also has done a series of stories that do detail some troubles over there. >> jon, thank you very much. brian, thank you. and josh, i'm not going to thank you yet. you have a whole hour to go. thanks very much for sticking around. coming up next -- >> we're streaking! we're streaking! >> stocks are streaking too. the dow is trying to make it eight for eight. should you keep riding this rally? we're kicking it old school. a bull-bear battle after the break. plus, the chinese are coming. ready to set up shop all across the south, alabama, mississippi, south carolina and beyond. is this coming red wave in our

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since we've been talking so much about apple, we might as well give a little bit of a bright spot ray of sunshine for research in motion, the blackberry maker is currently up just over 5%. a possible reason here, folks, for the first time in recent memory the company has not issued an intraquarter profit warning. what do you make of that, josh?

>> hoo ray. >> exactly. still a long way to go. >> it looked like it was kind of snapping a down trend. was that a three-month chart? >> i think it up again. that's a year-to-date chart. about three months. >> this might be overly hated or overly shorted. i can't get excited to the long side knowing what i do about where the installed user base is going. >> maybe it's just a short-term trade. >> there's been so many of these 7% spikes and then if you get suckered into them because truthfully this is the ultimate melting iceberg. >> i am a blackberry user. i do not use apple products. the dow above 13 k, the yield on the 10-year of course the big story of the week it's up 15%. so let's get straight to the trading floors. bob pisani is at the nyse. rick santelli is in chicago. and you've been all over our screens today, bob, talking about the reallocation trade that is finally occurring. >> well, i don't want to make too much of it. something has changed. when you get bond yields of 14%

and cyclical end of the stock market rallying big-time, i think something has changed. now, i think a lot of money's coming out of bonds and into cash right now. not necessarily stocks. but let me show you something. it's at extraordinary week when you have bond yields up you'll see when you have 14% yields up and bank stocks rally big-time. there's the 10-year. look at that move up for the last few months at the highs here going back to october. but if you put up the groups we've had this week, bank stocks, housing stocks have rallied dramatically. transportation stocks have all rallied dramatically. that's fairly unusual situation when you've got kind of thing going on. there you go. transports, industrials, remember the s&p 500, mandy, up only 2.5%. all the sectors outperformed. when you get a steepening yield curve, that helps banks out. bank stocks with big rallies this week. and of course the buybacks going on as well. that really helped. >> it certainly did. i want to get to rick santelli because i guess being in the

bond pits there, rick, you've been owning this story of the week, haven't you? >> well, you know, better than owning the paper itself on a week where it's going down so quick. but i hate using percentages on yields. but i can understand why we are doing it on one of these historic moves with regard to weekly basis points. but i'll even challenge that 14%. if you look at a five-year note currently at a 1.12 yield it closed last week a smidge under 90 basis points around 88. that's like a 23%, 24% jump on the fives. so, yes, these are big moves. don't get necessarily distorted in the percentages. the reason percentages are big is because we're normalizing what was a very abnormal set of interest rates with regards to how low they were on history. >> maybe we're back to the old normal. thank you very much, rick. how can you keep riding the equity rally? or should you be preparing for a pullback? let's ask barry knapp with barclays and still our guest

host here josh brown. barry, in a week where essentially we've cracked some psychological and some technical milestones, have we temporarily run out of puff here? >> well, we wrote a report last week hit titled april showers. i'm not so sure we can't really in the near-term. but we think there's a series of potential negatives for eggties equities as you move into april. earnings season was very messy. we powered through it because we were in the middle of the ltro, the liquidity coming from all that big developed world central banks. i don't think it will be such a favorable event next go around. energy prices presents a real problem. you saw that in this morning's university of michigan confidence number. >> barry, it's josh brown. i'm a big fan of your work. and last summer i guess right around this time last year you had put out a note about escape

philosophy and i think bar rens picked that up. and we stalled out on that because europe got serious. do you think what we're seeing now is picking up where we left off last spring? and is this sustainable enough that in the second half when we lose some of the stimulus that we're seeing, can it kind of feed onto itself and do its thing going forward? what are your thoughts there? >> i'm thinking, you know, after learning a bit of a lesson around that a year ago, you know, what you've really seen over the last couple of years is since the recovery started is that things like nominal gdp and nominal consumption have been very stable, but where we've gotten hurt has been when we've had these little inflation spikes. looks like we're set up for another one. and for me to really get that escape velocity going where business confidence is strong enough that you get really robust cap x and labor market investment, i think we have to settle public policy issues first. tax policy and the like. my inclination, josh, is to

think that's a 2013 event rather than a 2012 event. >> in other words nothing's happening before the election on the taxation stuff. >> that's right. >> okay. barry, thank you very much for that. and we've got herb here joining the cast of thousands today. >> hello, mandy. >> i bluffed you this morning. pessimistic and negative and that's exactly why we invite you on the show. you've been stressing that investors need to really pay attention to earnings quality, right? >> that's right. >> and today you have an alert on milan. >> a generic drug manufacturer. when it had its day a few weeks ago it opened an earnings forecast for, wait for it, 2018. that's right. six years from now. any time a company offers a forecast that far out, you've got to wonder how do they know? well, in their case it may in part come down to how they account for one deal. now, the deal in question surrounds $22 million in cash mylan paid late last year for the rights to pfizer's

technology behind advair. the company also put $376 million on its books as a liability. now, you can find deep in the weeds accounting stuff in something i've written on cnbc.com. but the point is this, that liability is largely created at management's discretion using various assumptions on what will happen years from now, if and when the product hits the market. now, i checked with veteran forensic accountant on this very thing. and he runs the financial shenanigans detection group. he told me that spread between the amount of cash paid and the liability, well, that's really unusually wide. so so wide that he believes mylan has created quite legally very important to point out the equivalent of a giant reserve that over time can be reversed to boost earnings. the cfo told me that all investors in any drug company

really care about is earnings adjusted to ignore that kind of thing. and maybe that's the case. but it all starts with that nonadjusted number. that gets back to the six-year forecast we're talking about. look at the chart since that forecast was made, it appears wall street has its doubts as well. >> i got to ask you, this really begs the question, how could an investor, how can we tell whether or not a company used balance sheet to boost earnings? >> agree question, mandy. what you have to do is after the earnings come out go to the 10 q or k and see if it's adjusted downwards. you have to go to the documents. >> i've been listening to you uncover these things since i'm like 15 years old. i was reading your columns in the '90s. seems to me that one out of two of these is some kind of pharmaceutical or drug-related biotech company. why do you think this sector is

so prone to having these type of discrepan discrepancies in accounting? >> you have a lot of hype around the drugs. are they going to make it or not? you have to get people attached to the story. in this case for six years. this drug is not even technologically feasible until 2016 according to documents. by the way, john told me it's a big block buster. this is a game changer for the company if it happens. between here and there generics aside, anything is possible. >> did josh suddenly make you feel very old, herb? >> i might say everyone around here really makes me feel very old. >> looking great. >> where you're going to be in 2016. >> hide your $6,000 shower curtains because the cause is on the loose. scott cohn detail. and lin sanity. like a bad com stock has crashed

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take a look at shares of

tyco. having a pretty good year so far. that stock is up nearly 15% in 2012. the man who was convicted of looting that company and treating it like his own personal private piggy bank, former ceo, is back in the big apple and living on fifth avenue again. but there's more to this story than meets the eye. so we brought in senior correspondent scott cohn to do some digging for us. hey, scott. >> he's on fifth avenue, technically just off of fifth avenue little farther uptown from his famous apartment. remember the $6,000 shower curtain and $15,000 umbrella stand? we caught up with him today in harlem on his way to his new job on work release from the lincoln correctional facility just off fifth avenue at 110th street. he went to prison in 2005 convicted of grand larceny for using his firm, tyco international, as his personal piggy bank. he moved into the work release facility in january. started his job last month

reportedly for a nonprofit organization and he does get to go home now on furlough over the weekends. but remember those fancy parties? he can't do that. he has a curfew has to be back at 10:00 and in the facility during the week. his sentence was 8 1/3 to 20 years. he could be out as early as august. apparently because he's been a model inmate. no disciplinary problems whatsoever according to the department. >> can i say one thing here? back in the day i had written a lot about tyco and the allegations of accounting issues and people telling he would do and he would try to discredit me at every turn. i was person on guard with him. >> how do you like seeing him? >> he's paid his dues. >> he's a model inmate. >> that's important. >> disaster du jour, this one doesn't fall far from the apple

tree. >> no. this is jc penney. just to show i'm fair and equal, i like to say jc penney is down, been down about 15% over the past week or so or the past bit of time. and it's kind of interesting because it started falling after the company came out with same store sales that weren't what people expected. on top of that you've had a series of s&p, fitch, moody's cutting the debt ratings on the company. so, you know, but, again, i look and keep saying the same thing over and over again. what does the company say? it's going to take years to turn around. and wall street stretreats it a short-term. >> herb, isn't this whole thing about the new ceo from apple and he's going to re -- >> yeah. >> so i saw the new stores, it doesn't look very different to me. numbers don't look great. >> it's a process. the numbers aren't going to look great right now. >> takes a while to turn around. >> but they added a lot of market cap on in advance of this and i think maybe they're getting disappointed it is going to take so long.

>> people always buy on the story. they buy on it and passion it out. you watch. >> how about a pina colada. up about 12% on earnings. we're ahead in the second half of the show. >> actually, pretty nice this saturday. we're going to go to home depot. buy some wallpaper. maybe get some flooring. stuff like that. maybe bed, bath and beyond. i don't know. i don't know if we'll have enough time. >> sounds like my weekend. anyway, why frank the tank might want to head to wall street. plus casino royal, profit and pain from america's out of control love affair with blackjack, roulette, craps. digging into the potential house of cards when we come back. ♪

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welcome back to "street signs." only 90 minutes left in the trading week. so let's get to today's street talk. eight is great. the market on pace to see its eighth straight winning session if we hold at these levels, it will be the dow's longest winning streak since february of last year. >> wow. >> yeah. have enough time to hit up any of these old school stocks, bed,

bath and beyond and home depot hitting new 52-week highs. do you like those? >> i've been talking about those for months. rentals are hot now. and if you want to rent out a space, fixing up is the first thing you do. so those are the stocks that have benefitted much more so. >> and it's been great weather. people are out with the deck and the lawn. >> absolutely. home depot feeds right into that. look at that stock. a thing of beauty. >> it is indeed. is america addicted to gambling? stocks have been on fire over the past few years as more and more states ease gambling laws. but has our love affair with rolling the dice finally reached its tipping point? if so is it time to cash out? we're hitting this story on all fronts today. in just a moment the downside of the obsession. but first one stock that's absolutely gone gang busters because of it. shares of shuffle master, ticker shfl hitting new 52-week highs. the company makes gaming supplies like card shuffling

machines and casino tables. so does the gambling boom mean it's time to double down on this hig hig hig high-flier. how and why? can it continue? dennis. >> good afternoon, mandy. i think the move can continue. i'm not going to predict how high the stock can go, but we think that the fundamental support higher valuation and a further run. this stock was only up 2% last year. as you said, it's up almost 50% year-to-date. but it is moved along with strong fundamentals. when you've got a country that is so urnder water financially and looking for a painless tax, you're going to see a lot more jurisdictions such as ohio, massachusetts, maryland's expanding. >> yeah. >> it's almost unlimited. >> but is the demand really

coming from the united states? because as we're going to be discussing in just a second, it feels like this is already a very mature gambling market. how much demand is coming from elsewhere like asia? >> yeah. not only asia, but also south america, southern europe. today over 50% of shuffle master's revenues are international. >> hey, dennis, it's josh. is the story here that shuffle master is essentially the arms dealer? so we don't care so much which region or particular hotel is strong so long as they're all buying products from shuffle master? >> yes. >> okay. >> they're a little different than a slot manufacturer, which are considered arms dealers also. but there's going to be plenty of cross border wars in the u.s., in asia, in south america. and the more jurisdictions, the more need for gaming supplies. shuffle master pretty much has a monopoly on the table side of

the business. they make the shufflers, as mandy said. proprietary table games. >> what's your target on the stock right now? it's 17 and change already. >> i think the stock can get to the mid-20s over the next 12 to 24 months. i don't know if it's going to go straight there from here or whether it needs some digestion over the last big move. but higher is in the cards. >> okay. you've got a buy rating on the stock as well. dennis, thank you very much. >> sure do. >> from boom to bust, connecticut's foxford casino is in dire straits. it has more than $2.3 billion in debt. this week's cover story in "new york times," good to have you with us today. i'm just wondering, not just foxwood's but in general is there an oversupply of casinos in this country? is that the problem? >> i think it's getting to that

point as more states find it hard to raise public revenue. more states are getting into the game. and there's a finite supply of gamblers. so they're competing for the same set of people. so the megaproperties like foxwood's may be a thing of the past. >> indeed. this follows on from a conversation we had yesterday with chad from morningstar said caesar's is at risk of chapter 11. what's the end game here? is foxwood's going to go under? >> no. foxwood's isn't going to go under. i think that under its new leader they're learning to be a different kind of business and probably ultimately a smaller business that operates more smartly. for the long time they were the only game in town. they were the big casino between new york and boston and then joined by mohegan sun and they just grew wildly. and the tribe that owns them took a lot of money out of the

business. some in dividends and some to build a big museum. a great museum but it was very expensive $250 museum -- >> it's josh. i'm curious, i saw on your research and i found this really fascinating. you mentioned that pennsylvania is now this mecca of fwgaming. so where the steel mills were, they have casinos now. are they taking business from the atlantic cities and connecticut gaming palaces? is that where new yorkers are going, for example? >> well, i think pennsylvania specifically taking business from atlantic city, philadelphia is right on top of atlantic city. atlantic city is being battered right now. >> right. >> aqueduct just opened in new york. and the whole mid-atlantic region is booming with new casinos. so it's going to effect everyone including foxwood's and mohegan. >> how much is this being driven -- you mentioned with public revenues in dire straits, i guess resistance or criticism of gambling somewhat fallen by

the wayside in favor of just getting the mo lar. are we addicted to gambling? is this a bad thing? >> i think, to me, you can say it's an unfortunate way to raise public revenue, but it's not an ineffective way to raise public revenue. when you see what's happened in connecticut, the state has benefitted by $6 billion directly from the slots payouts at or the slots revenues at fox wood's and mohegan. that's a lot of money. >> yeah. >> and then there's the 20,000 jobs. you can say where this is unfortunate, but it's not necessarily nothing. that's money. >> michael, thank you very much for joining us. and up next, another shot of hopium for real estate. this time on the commercial front. plus, just like the one-hit wonder, who let the dogs out, 15 minutes of fame seems to be over. the question is who on wall street is going to be left

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welcome back. bob pisani here. coming up on "closing bell," wireless wars. which 4g wireless provider will be the big winner for the new ipad? we have that trade. and a tale of two banks. jpmorgan passed the fed's stress test, but citi failed. in talking numbers we'll show you why citi may actually be the safer bet for investors. and small caps have surged so far this year. can they continue to outperform the broader market? answers you can't afford to miss are ahead on the "closing bell." first, more "street signs" with mandy. >> okay. thanks, bob. an improving labor market a key indicator for an improves office property market. which indices and cities are showing the biggest gains? the largest commercial real estate investment services firm in america, great to have you on the show. where are the winning cities and

why? >> good afternoon, mandy. great to be with you on the program. we've seen a very interesting recovery pattern shape with technology markets dominated by the coastal metros really showing much stronger results than the rest of the company. office properties in general have lagged industry recovery even though commercial real estate as a whole has seen a lot of improvement over the past 18 months. but i think based on the indicators that we're tracking in 2012 especially 2013, that's about to turn. which makes this a very interesting window of opportunity to look at office investments. >> and i'm seeing this. san francisco right at the top. i'm wondering how much momentum and social media and hot areas like cloud computing have been driving that. >> that is a direct correlation with the net demand for office space. we've seen markets like san francisco, seattle, san jose, boston, really lead the recovery because they have a combination of recovering in demand for office space because of technology and a lot of media

firms. but they have also had very little new supply added, which has kind of been the story for the office sector in general. that's one of the positives going forward. there's not a whole lot of building going on. >> indeed that is the case. thank you very much with your findings. that didn't last long. the knicks new coach says stop the linsanity. he has a new game plan and it doesn't involve jeremy lin. is that a smart business strategy? >> i'm not sure because the knicks have to win, mandy. that's the key right here. mike out, new coach in. we kind of charge ourselves with let's chart the linsanity. if it was a stock, what would it look like? we really searched and we found net app from 1997 to 2002. here you go if you go straight and he's kind of low. he's cut by the warriors, cut by the rockets. around 2000 where that shows that's where linsanity builds up. it gets to a height around where he played the lakers and scored 37, 38 points. then it starts going down.

now we're to a point where it's a little bit awkward. the knicks are not winning games and they have to come back and do something. by the way, from the linsanity standpoin standpoint, not selling too much in the stores. i talked to mitch today. he said he's made enough money so far -- obviously he doesn't want to put things on discount. >> what are the stores going to do with that inventory? >> if the bubble bursts now, there is a lot of inventory out there. >> blame the fed for linsanity. fed-induced bubble. >> listen, this is going to be interesting between, you know, the new coach, mike woodson. it's not that he doesn't want to play jeremy lin. it's that he thinks the key to winning is not mike's style of running up and down the court. and he likes veterans. so we'll have to see whether that pans out. >> we'll watch your show tonight 11:30 p.m. >> on nbc sports network special time because i know that you want to watch march madness.

>> okay. coming up, a new kind of holy water. plus china in your backyard. more chinese businesses getting ready to set up shop here. it will create jobs, but the question is is it really worth it? ♪ [ male announcer ] the 2012 m-class continually monitors blind spots, scans the road to reveal potential threats, even helps awaken its driver if he begins to doze. so in the blink of an eye it will have performed more active safety measures than most cars will in a lifetime. introducing the all-new 2012 m-class. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

china could be setting up shop in the deep south. alabama inviting chinese inviting chinese companies to a two-day conference, hoping they'll open factories there and create jobs. but is this really a smart move? max reese from wssa is there. what are you finding, max? >> good afternoon to you, mandy. this conference all came up about two or three months ago after the golden dragon copper tubing company decided to start business in wilcox county, alabama. that's only about 90 miles north of us. that was a very competitive bid process with several other states. what those investors told me, they said this it was the people of rural alabama, rural southwest alabama, that really closed the deal. they even said that the banana pudding and the baked goods that the people up there made for them when they came to town was one of those key factors. so the goal of this conference

was to bring similar business like that. and today china telecom was here, zte, and of course, golden dragon all here talking about how they can create more jobs, develop more manufacturing in this area. and what the goal here at this point is to try to get these companies to be here in the next five to ten years, to try to get some of these rural areas really on the uptick on unemployment. >> max, thanks very much. the question, i guess, on the back of that is, is recruiting chinese factories to the u.s. of a a good idea. don, sounds to me like they wanted to create jobs. isn't that a good thing? or are there any concerns? >> mandy, i can't imagine why we would not want to allow chinese companies to come over here, bring their capital, bring their technology, and build factories,

and create jobs in america. can you imagine us saying, the canadians can come in, the japanese can come in, but the chinese can't? i mean, this is a nonstarter issue. bring them in and we'll be happy to have the work. >> allen, what are you worried about? >> that is a fascinating comparison we just heard. china versus canada. chinese business practices and canadian exactly identical, should treat them exactly the same, i can't believe that i heard that, frankly. the biggest concern that i had, and it's only one of many, is that chinese business practices are the most corrupt on earth of any major economic -- >> hang on, then they're under our regulations. they would be under our regulations. >> that actually hasn't been much of a problem, for example, for chinese companies listed on the u.s. stock exchanges. because we know, and i'm sure it's been reported on cnbc that

many of them have been producing very funny numbers for american investors. american financial regulatory authorities have been trying to investigate. they've been trying get access to these companies. >> wait a minute -- >> please let me finish my point and then you can go, all right? american regulatory authorities have tried to get access to their records. they've been shut out of china. i don't want the chinese business system to have a bigger footprint in the u.s. economy. that would be a very corrupting influence. >> you're talking about chinese companies that are operating in china, having -- >> i'm talking about chinese companies listed on the american stock exchanges. >> they're not operating in america. >> subject to american law. >> it operates under american jurisdiction. >> so do companies listed on american stock exchanges. >> don, what do you think on that point? >> i can't believe what i'm hearing here, quite frankly. these companies that have come over here to america, they're going to operate according it our rules, our- >> who says?

>> -- our regulations. if they do something that we regard as illegal, we will slap them down. that's always been the way it is. and i think this is a complete nonissue. >> and what about the profits? is there any concern, don, that the profits that these chinese factories, chinese companies here in america, is there any fear that that money would go back to china, or would there be some kind of law that would make them try to keep and reinvest here? >> mandy, i sure hope there's no law that says you have to keep your profits here. that again would be a complete anti-market thing for america to launch. i can't imagine we would do that. if they can earn some profits here and take profits back, that's fine. just as they can take their capital that we presume came from past profits to bring to america to invest in alabama. and this company, too, by the way, at the center of this, is not state capitalism. it's a privately-held company

that makes very high-tech, precise copper products that we would love to have made here rather than someplace else. >> anyone who knows anything about the chinese economy knows that there ain't no such thing as a totally private chinese company. that's a myth. the line between private and public in china is very lurid at best. every company in that system is at the whim of the chinese government. >> what would happen to our economy if we said, we're not doing any business in china, in terms of the gdp, in terms of the -- >> first of all, i would much rather see productive american investment in things like manufacturing stay here, absolutely. i mean, what this economy needs most of all is more productive activity. more productive output. more manufacturing. we need it here, not there. frankly, i would be happy with that. there's certainly no shortage of

capital in the american economy. we all know american-owned corporations are sitting on $2 trillion worth of cash. so it's not that we're short on financing. >> but we need jobs. >> the chinese company is ready right now to start, build a factory, and create jobs, produce a product, sell them here or sell them someplace else. let them start. >> intelligent policy making is out of desperation. >> great debate. thank you very much for that. i have to cut in there because the show's going to end very shortly. but not before we tell you what the pope has in common with justin bieber and britney spears.

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